City pension fund seeks $30M from parking deal

Sep. 5, 2013

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The board overseeing the city of Cincinnati’s troubled pension system Thursday voted to recommend asking City Council for $30 million in funds from the parking lease deal, as well as cutting benefits to current and future retirees and boosting the city’s annual contribution to as much as nearly $45 million annually.

The recommendation by the Cincinnati Retirement System Board of Trustees passed 6-4. Those approving the recommendation were all appointed by City Council, with the four no votes coming from members picked by retirees and current employees. One other elected representative was not present.

CRS executive director Paula Tilsley said that the board does not plan to approach City Council with its recommendations until after the November election and after a new council is seated. City Council has final say over any changes to the pension system.

The $2.1 billion plan currently is only 61 percent funded, a measure of expected future assets compared against future expenses. A plan is considered to be in financial trouble anytime it dips below 60 pecent.

The underfunding translates into a projected gap of about $870 million, including $7 million in anticipated health care shortfalls. Projections indicate that recommendation would boosting that number to 80 percent funded within 8 to 10 years, Tilsley said.

“The board is very passionate there is a way for Council to fix this problem,” she said.

The proposal comes as voters will consider an alternative proposed charter amendment this fall that would freeze and eventually eliminate the city pension plan and replace it with a 401(k)-style plan. In addition, that proposed amendment would require the city to pay off its $870 million projected shortfall within 10 years.

The recommendation includes cuts cost of living increases (COLAs) for both current employees and current retirees, and puts such COLAs on a three-year hiatus for both groups. In addition to the lump sum from the parking deal, the city would be asked to boost its annual contribution into the plan gradually over the next five years until the city is paying 28 percent of its payroll (about $44.8 million).

Non-fire and police workers who retired from the city before 2011 currently receive a 3 percent cost of living adjustment that is compounded, while current employees have a simple COLA linked to inflation that is capped at 2 percent. The proposal would cap COLAs at 2 percent for all current and former city workers and end compounding. (Fire and police have a separate pension plan.)⬛